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story category Louisiana Fiber and 'Economic Blackmail'?
BellSouth clarifies call center comments
(old news - 10:11AM Monday Feb 28 2005)
tags: Fiber · competition · municipal
Last Friday BellSouth Louisiana president Bill Oliver told the Baton Rouge Advocate the company might consider pulling a 1,300 employee wireless call center from the region if locals moved forward with a plan for a triple-play fiber network. The comments caused local Lafayette officials to accuse BellSouth of "economic blackmail", and forced BellSouth into damage control mode. The Advocate later ran a second story clarifying Oliver's concerns that the municipally run fiber project could create a local monopoly.

Related:
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  4. Tuesday Evening Links
  5. Seattle Still Considering FTTH Network
  6. Time Warner Cable Backlash Continues
  7. Incumbent Dirty Tricks In Wilson, NC
  8. Utopia Hits 100Mbps
Forums » Louisiana Fiber and 'Economic Blackmail'?
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JTRockville
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So... the 1300 jobs cost Lafayette taxpayers $18m?

Interesting to know the Lafayette taxpayers are willing to subsidize private enterprise too.

Blasterbator
Sent By Grocery Clerks

join:2001-02-20
Jackson, MS

Re: So... the 1300 jobs cost Lafayette taxpayers $

The Bellsouth person is concerned that... ...the municipally run fiber project could create a local monopoly.








I am at a loss for words.

cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN

Re: So... the 1300 jobs cost Lafayette taxpayers $

I think it's funny how giving consumers a choice is a monopoly.

ColdFiltered

join:2005-01-25
Atlanta, GA

Re: So... the 1300 jobs cost Lafayette taxpayers $

I was thinking it had to do more with government competing in the free-market. When the government competes in the free market as a not-for-profit institution then no sane private or publicly traded company can afford to compete.

JTRockville
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Re: So... the 1300 jobs cost Lafayette taxpayers $

Private schools are doing just fine, even though free public schools exist. Lafayette won't be giving away subscriptions, so what's the problem?

Tacoma's Click! network is an example of a municipal system coexisting with investor-owned cable and telephone companies.

I don't see anyone going "belly up" over Lafayette's system, unless they're totally incompetent.

batageek
Slave To The Duopoly
Premium
join:2003-01-25

2 edits
"Is it the place of a local government to subsidize the private sector?"

Hehehe

Very nice, JT....dodge, parry, lance, thrust!

ronpin
Imagine Reality

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·AT&T Southwest

Re: So... the 1300 jobs cost Lafayette taxpayers $


BellSouth HR Dept.
...
blah194

join:2002-03-04
Lake Charles, LA
...is that this fiber project is NOT being funded by the Lafayette citizens, but by you guessed it, the federal government (a.k.a. the taxpayers). So you should keep that in mind next time you rail on about Bell and Cox being afraid of competition.

JTRockville
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Re: What you people all fail to realize...

Which project is being funded with federal dollars? BS/Cingular call center, or the Lafayette municipal system?

Either way, I think you're mistaken.

The $18m for the BS/Cingular call center all came from Lafayette and Louisiana:

said by the advocate article in the news item:
The concessions include $10 million in state tax breaks, donation of land and the building from LEDA and discounted utilities from LUS, Gothreaux said.
State = Louisiana
LEDA = Lafayette Economic Development Authority
LUS = Lafayette Utilities System

I'm not sure how Lafayette plans to fund the municipal system, but I'd be absolutely shocked if the feds contributed.

FiberNow

@cox.net

Re: What you people all fail to realize...

Revenue bonds to be paid back over 25 years.
jsouth
Jsouth

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You do know you pay taxes to the state which are separate from federal taxes for things like this don't you? That is why you file a state tax return.
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ossito16

join:2004-07-31
Whiting, IN

knockout

This is it Lafayette, go for the knockout. Bellsouth backpeddling, take them out now.

cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN
·Verizon FIOS

They had it right originally

quote:
In an LUS-dominated market, Oliver said Thursday, BellSouth would have less incentive to keep a call center in an area where it has diminished business interests, especially considering those same services could be performed by people in "Timbuktu."
...
The headline running over The Advocate's metro edition story Friday said "BellSouth threatens pullout." The Advocate ran a correction acknowledging that the word "threat" should not have been used in the headline.
I think the article, while maybe not the most accurate, is exactly what BellSouth meant. They just didn't say it. You could call it "threatens", "considers", "suggests", or "insinuates". They all mean similar things. BellSouth knew exactly what they were saying and knew exactly how it would be interpreted. They just didn't flat out say it. BellSouth's PR firm and management aren't rookies you know.
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pende_tim
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Re: They had it right originally

Not having a financial interest in the area where the call center is located must explain why "Timbuktu" would be chosen over Lafayette. They have a lot of financial interest in Africa, unless there is another Timbuktu in the USA.
DSLJohnny

join:2001-01-25
Atlanta, GA

How about some common sense...

As much as y'all hate BellSouth and monopolies, do you really want government running your communication services. Shouldn't we really be trying to LIMIT government?
How is a private company supposed to compete with a government? Just why would BellSouth want to even show up if the government is running the communication services?

And yes, believe it or not, Bellsouth is not in a monopoly position in broadband - they are actually in the minority providing broadband. And they are in the fight of their life with the cable companies. Why don't you just let private enterprise duke it out. BellSouth and the cable companies.
Government?? give me a break!
John

JTRockville
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Re: How about some common sense...

Sounds to me like municipal systems will provide the perfect compliment to a market dominated by telephone and cable companies. A "rule of 3s" so-to-speak.
JonR800
Premium
join:2003-08-06
Farmington, MI

Fight of their life.... haha... where's the proof on that one? United States broadband hasn't seen the same evolution as the rest of the world. Have you seen BellSouth's plan for future broadband? If it takes the government stepping in to give the lazy greedy telecom giants a kick in the pants, then so be it.

If they're so worried about Lafayette and other communities offering fiber, then why don't they beat them to it?
ricep5
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Jacksonville, FL
·AT&T CallVantage
·Comcast Formerly ..

Re: How about some common sense...

JonR800 sez; "If they're so worried about Lafayette and other communities offering fiber, then why don't they beat them to it?"

The problem is BellSouth can't "profitably" provide fiber in the same fashion as the municipality.

Lafayette has tax-exempt bonding status and can finance a fiber deal over the 30 year life of the bonds. BellSouth can issue bonds to finance the fiber draw as well, but they will pay a higher interest rate for them because they are not tax-free. BellSouth has to charge higher rates because, not only are they paying off those higher cost bonds, but also must pay shareholders a dividend and pay executive bonuses. And with Wall Street very short-term oriented, they will want those bonds paid off very quickly so the higher profit will come sooner on the back end.

BellSouth can claim to be misquoted all they want, I read the original interview, it was a threat clear and simple. However a BS State President has no more influence on a Cingular call center than a field technician. His role is to play up to the state utilities commission on lobbying efforts, not set operational policy.

Serious egg on BellSouth's face when it was disclosed that the parish is subsidizing the call center. Can you say "biting the hand that feeds you".

JTRockville
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Re: How about some common sense...

said by ricep5 See Profile:

Lafayette has tax-exempt bonding status and can finance a fiber deal over the 30 year life of the bonds.
Are you sure thay's how Lafayette plans to finance the venture? Municipalities have lots of choices. The TriCities proposal was backed only by private investors. (from their pdf flier)

What does this cost?
NOTHING TO THE TAXPAYER. Private investors will fund approximately $58M - $62M to build the utility. The services offered will be 10 - 15% cheaper than those other service providers are offering.

How is it paid for?
The necessary money will be raised ONLY by securing private investment. Much like a mortgage, the Cities will own and operate the system, while private investors will receive interest paymentsuntil the funding is repaid. Payments on the “mortgage” will be generated from the user fees.

Will it raise my taxes?
No. Not a chance, because private investment backs the entire project. In addition, the referendumquestion specifically prohibits the utility from using tax-backed financing. Any allegations, which claim taxes will be raised to finance this project, are false and an attempt to mislead the voter.
bogey780

join:2004-03-19
Here

Re: How about some common sense...

Any promise made in Louisiana by anyone in the state is a lie. Any promise made by someone to the state is a lie.

We all remember the Stelly Plan.

JTRockville
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1 edit

Re: How about some common sense...

I guess it boils down to whose lies the taxpayers want to fund:

The representatives they voted for, or corporate bullies.

Drex
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Octopussy2
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Batavia, IL

That is exactly what we said JT. Thanks for pointing out our model of financing. And many municipal models can be funded in many different ways - not all affecting the taxpayer. It really depends on each city and their needs as to how a build may be financed. Citizens in some cities MAY vote to use tax-backed bonds, such as G.O. bonds, to build a utility because they are sold at a much lower rate. Many may not choose that path.

Of course SBC and Comcast didn't care that private investors were to be used to fund the FTTH/FTTB utility here. They still lied on their mailers going to the homes of Tri-City residents claiming what a "risky" venture this would be for the taxpayers. Not to mention the same message in their TV ads, newspaper ads and told by mouth by the "walkers" they hired who went door-to-door telling residents of "higher taxes" they would face when inevitable failure would come to the Tri-City utility. It was all a huge FUD campaign.
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ricep5
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1 edit
Tax-Exempt Muni's can be sold to anyone. Municipalities are using their bonding authority to have the bonds issued. They can be revenue bonds from taxes or from other sources, in this case fiber subscribers.

Everyone gets confused that somehow because the municipality is using their bonding authority that the taxpayers will somehow be responsible. This would be the case if the city issued revenue bonds to build a bridge and payment was directly linked to taxes paid by the local citizens. Another example is when school districts issue referendums on adding to the tax rate to finance school construction. The purpose of the tax increase is to directly pay the cost of the bonds.

In this case if the bonds default because they can't get enough subscribers immediately, then typically they will be refinanced over a longer term, sold to others at a discount, or in worse case, liquidation to cover the bond default.

A good example of tax-free bonds that defaulted was the WHOOPS scandal of 1981. This power cooperative in the northwest used the State of Washington's tax-exempt bonding authority to finance the construction of dams and a power grid to supply power in rural SE Washington. The bonds defaulted because they overestimated how much ratepayer revenue they could acquire to pay the bondholders. Washington did not lose a dime over it. The WHOOPS bonds were refinanced and merged into another grid cooperative.

The "private" investors they speak of are the open markets where tax-free muni's are sold and brokered. So if you have a part of your 401k invested in a low-risk tax free mutual fund, then you have invested in some form of municipal based infrastructure project.

JTRockville
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Re: How about some common sense...

Along with choices for funding, are choices for length of payback time. If I recall ( Octopussy2 See Profile can probably verify), the TriCity bonds had to be paid back sooner than 30 years.

Octopussy2
Premium
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Batavia, IL

Re: How about some common sense...

For the first Tri-City referendum in April 2003, the cities put the question on the ballots and the idea was to use G.O. Bonds. The length of the loan (or terms of the bond repayment) was around 15-17 years.

The second referendum was put on the ballots by the citizen group Fiber For Our Future (residents of Batavia, Geneva and St. Charles, IL). The question in this referendum prohibited the cities from using any tax-backed financing to build and run the broadband utility. Revenue bonds could've been used or private financing (private investors)were going to be found. The length of time for paying back the financed money would've depended on the negotiated timetable between the cities (non-profit utility) and the private investors.
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bogey780

join:2004-03-19
Here
How much competition do you think there is in the world?

Cable broadband doesn't exist in the most advanced telecom infrastructure. You can only get 1 source for the connection. Chew on that.
Gilitar

join:2000-11-20
Mobile, AL
·AT&T Southeast

said by JonR800 See Profile:

Fight of their life.... haha... where's the proof on that one? United States broadband hasn't seen the same evolution as the rest of the world. Have you seen BellSouth's plan for future broadband? If it takes the government stepping in to give the lazy greedy telecom giants a kick in the pants, then so be it.

If they're so worried about Lafayette and other communities offering fiber, then why don't they beat them to it?
You have hit the nail on the head. If BellSouth would meet the publics needs this wouldn't be happening. I think the government could do a better job than Bellsouth at this point. Bellsouth is a dinosaur that can't evolve fast enough for the customers needs. We all know what happened to the dinosaurs!
AboutBell1
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said by DSLJohnny See Profile:

As much as y'all hate BellSouth and monopolies, do you really want government running your communication services. Shouldn't we really be trying to LIMIT government?
How is a private company supposed to compete with a government? Just why would BellSouth want to even show up if the government is running the communication services?

And yes, believe it or not, Bellsouth is not in a monopoly position in broadband - they are actually in the minority providing broadband. And they are in the fight of their life with the cable companies. Why don't you just let private enterprise duke it out. BellSouth and the cable companies.
Government?? give me a break!
John
It makes about as much sense as Gov't running the car highway system. What makes the information highway that much different?
Stumbles

join:2002-12-17
Port Saint Lucie, FL

Re: How about some common sense...

Hmm, unless I'm mistaken. The Federal Government, State Governments and Local Governments DO run our highway system. Could it be better? Maybe. But then I guess the global information network used by the DOD is a piece of crap.

Now to the point. How about checking with the customers of other municipalities that have their own fiber before making such a blanket statement.

Oh wait, the local governments can't possibly know what they are doing with such high tech stuff. Yeah better leave it to the fat corporations and let them suck the money out of a local area rather than letting that money be recirculated within the community.
ricep5
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Re: How about some common sense...

"Now to the point. How about checking with the customers of other municipalities that have their own fiber before making such a blanket statement."

Ashland, Oregon is a great example of muni based fiber that the citizens really like. I know of 3 businesses who relocated there just to get access to the cheaper bandwidth.

"The Federal Government, State Governments and Local Governments DO run our highway system. Could it be better?"

In 1983, there was a proposal to privately finance a multi-lane toll based highway from Chicago to Kansas City that would only allow trucks. It reached the feasibility status, but finally became bogged down when DOT couldn't make a ruling as to how it would be "regulated". (ie: numbering, law enforcement, speed limits, contract set-asides, etc.) The firm doing the feasibility saw themselves as no different than a railroad. (DOT disagreed) When railroads were finished being deregulated, the feasibility was killed.

It's a very interesting discussion when you see the private sector attempting to provide traditionally "public" services and vice versa.

pcscdma
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said by Stumbles See Profile:

Oh wait, the local governments can't possibly know what they are doing with such high tech stuff. Yeah better leave it to the fat corporations and let them suck the money out of a local area rather than letting that money be recirculated within the community.
You don't let illegals run the books for the government. You don't let the Barney the dog run homeland security. Why would they let someone who is unqualified for the job do the job?
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bjbrock

join:2002-10-28
Mcalester, OK

Verizon is a monopoly to the point they are guaranteed existence. And due to the off the wall regulations the FCC has been spewing, we have government in the back pocket of the Bell's running the show.

Telco's were born under monopoly protection. Their infrastructures were built buy rate payers and they were to be trustees for the rate payers. Any other form of operations is 180% out from the purpose of their protection. Since they no longer meet this role as trustee, they should no longer be allowed any protection as a utility or legal monopoly. I reitterate, their infrastructure is supposed to be the rate payers infrastructure. The telcos could not have built the infrastructure without the protection of a utility. And for them to act as though they earned or developed this infrastructure as a competitive company is nothing short of stealing or a breach of their fiduciary duties to the rate payers!

doc

@155.58.x.x

Bellsouth and Cox have plainly stated that they will not provide FTTH in Lafayette. It is estimated that it will be at minimum ten years, probably 15-20, before they reach markets of such size. Of course they say that its because the city doesn't "need" that much bandwidth (even though they're providing FTTH in larger markets), the truth is that they have invested so much in their antiquated copper system that they can't afford to roll out fiber.

Rather than trying to partner with the city to provide the service, they've decided to tie up the entire project in litigation to protect their profits. . . hardly a noble tactic. I'm all for free enterprise, but if that enterprise refuses to provide a service the government has every right to intervene on behalf of its people

woody7
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Torrance, CA
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Hmmmmm.....

As I have said in the past, this isn't about hosing the phone companies or creating a municiple run monopoly, it is about doing what the telcos won't do.... If it gets done and doesn't cost the taxpayers, it will make them look bad....which by the way they can do on their own...
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BlooMe
bjbrock

join:2002-10-28
Mcalester, OK

Cingular is the cell phone division of Bell.

How does a fiber optic install hurt the Cingular cell division? And how can Bell even use the word monopoly in a defensive statement?

This is blackmail in every sense of the word.

Either the Bell's need to be brought back to a regulated utility or they need to be turned loose in a unregulated competitive market. As of late, they are enjoying the best of both worlds which only hurts the customer and pads the pocket books of the stockholders. Their arrogant mode of behavior is proof positive that the consumer is suffering for the hybrid status of telco's.

I would just as soon see muni's build their own fiber networks. At least the customer would be better served in that they would be closer to the management, ie. elected officials and have more ability to see the customer is once again the number one reason the service provider exists at all.

I say do away with all regulations and protections granting telco's guaranteed existence. Make them compete in an open market like everyone else.

Or better yet, let the municipal government take over the companies assets under eminent domain and get rid of the greedy telcos. When the people are threatened as Verizon has most assuredly done, the government definitely has the right to squash the threat.

SQUASH VERIZON!

bent
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Re: Cingular is the cell phone division of Bell.

said by bjbrock See Profile:

Or better yet, let the municipal government take over the companies assets under eminent domain and get rid of the greedy telcos. When the people are threatened as Verizon has most assuredly done, the government definitely has the right to squash the threat.
Hahaha YEAH!
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Marckus0513
Just Because

join:2003-01-11
Vernon, VT
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Since when did this thread become about Verizon?? Your opinions on the Telcos are clear, but would it be possible for you to stick to the subject of this thread??

Sheesh!!!

Marckus
nasadude

join:2001-10-05
Rockville, MD

pot calling the kettle black

"....that the municipally run fiber project could create a local monopoly."

he means "another monopoly" besides the one bellsouth has. Personally, I would call it "competition", but that's just the silly consumer in me talking.

Transmaster
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1 edit

You know....

If Lafayette put in this fiber system and did it right. The potential loss of 1300 jobs wouldn't matter because they would, if this system was promoted correctly, more then replace them with other, perhaps higher paying, jobs as businesses locate in Lafayette.

Cheyenne is now benefitting from all of the fiber that has been laid in this area over the years thanks to all of the military, Missile launch facilities, Bases, etc in the area. We are still copper based in the civilian area but much of the back bone is fiber. The major problem we have had is the mismanagement of US West, and later Qwest. They are now fighting their way back but they still are way behind. I am Pleased with My Qwest service, the alternative to it are Comcast which I hate, or local broadband providers using Qwest services who are much more expensive.
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Re: You know....

If its built "for the people and by the people" Who cares if its a monoply. The postal service is a monoply and its making money, And there is FedX and UPS, their making money. If the companies dont want to service an area because they aint going to make enough "MONEY" then the government should.

pnh102
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Wimps

BellSouth might as well sign its own death warrant. By refusing to stand its ground against one socialist broadband upstart, it has literally opened the floodgates to any other municipality that wants to get into the telecom racket.

Its particularly shameful that any government would seriously toy with the idea of killing 1300 jobs simply to pursue something that will be nothing more than a colossal waste of money. I guess jobs must be very easy to come by in Lafayette, LA can afford to kill 1300 of them. Its too bad such an irresponsible action on the part of one level of government cannot be stopped by another.
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Octopussy2
Premium
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Batavia, IL

Re: Wimps

You cannot honestly believe that BellSouth isn't just BS-ing the people of Lafayette by saying they will "take their ball and go home" and close a call center because they fear the muni competition of LUS. IT IS A SCARE TACTIC! And frankly, I think it is disgusting of Oliver from BellSouth to use such threatening language to try and intimidate others from competing - something they have a right to do.

If BellSouth wants to kill THEIR 1,300 jobs that is THEIR own fault. Don't blame it on anyone but BellSouth.

So the higher tax ploy didn't work, the "let us vote" ploy didn't work, now we are at the "BellSouth is going to kill 1,300 of their own jobs for no good reason and try to make it look like the fault of LUS" part. I certainly hope people see through the "man behind the curtain" smoke and mirrors scare tactics. The harder a Bell and Cable Co. fight it simply means the muni is onto something good and something that they will never provide.
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JTRockville
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1 edit
If BellSouth kills the jobs, it'll kill the deal they made. Lafayette can then take back the $10 million, the land, and the building they traded for the jobs (a deal totalling $18 million) and offer it to someone else.

Lafayette should easily be able to find another taker.

dreadzone

@cox.net

Socialist?!

I am shocked by the comments pnh has made! Someone has to step in and pick up the broadband ball and run with it! I'm fairly sure that Broadband is the future and what will make or break a country economically in the future.

So what's it gonna be? Money grabbing, greedy, sleazy, no good, for the money only telecos and cable companies, or our government who at least in some part is for the people. (At least more so than the greedy corporate side)

doc

@155.58.x.x

Re: Socialist?!

I guess my position falls somewhere in between dreadzone's and PNH's: I fully believe in free enterprise and do not believe that corporations are inherently evil. I do believe that in order for capitalism to thrive there must be competition. . .real competition, not just two companies (as in the case of Lafayette).

I also believe in a community's right to control its own destiny. BS and Cox have stated that they will not provide the services for which this community is asking. Why shouldn't the government satisfy this need if they won't?

FiberNow

@tsged.com

Lafayette needs your help!

The site of the "concerned citizens" group in opposition to our fiber plan is at www.fiber411.com. Please go there and support Lafayette in its fight against those yahoos!!
Forums » Louisiana Fiber and 'Economic Blackmail'?


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